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Judgment
By order dated 27th January, 2010, learned Counsel for the Respondent - Director General, Income Tax (Exemption) was asked to take instructions whether the matter can be remanded for fresh consideration on the application u/s 10(23C)(vi a) of the Income Tax Act, 1961 (Act, in Short). Learned Counsel for the Respondent has not been able to obtain instructions in the said regard.
In view of what has been stated in the order dated 27th January, 2010 and in view of the factual matrix of the case, we are of the view that this is an appropriate case which should be remanded for fresh decision.
The Petitioner Tirath Ram Shah Charitable Trust established and has been running a hospital-cum-nursing home since 1955. The said trust was granted registration u/s 12A and approval u/s 80G of the Act. On 6th November, 2003, Director General, Income Tax (Exemption), Kolkata notified that the Petitioner was covered u/s 10(23C)(vi a) of the Act.
On 5th June, 2007, the Petitioner filed an application in Form 56D for grant of exemption and continuation thereof u/s 10(23C) (vi) and (vi a) of the Act for the assessment year 2008-09 onwards. The application was required to be disposed of on or before 30th June, 2008. As per the case of the Respondent, at the fag end of the limitation period, on 16th June, 2008 notice was issued to the Petitioner fixing a hearing on 24th June, 2008. No one appeared for the Petitioner on 24th June, 2008. Consequently, an ex-parte order dated 27th June, 2008 was passed rejecting the application. The case of the Petitioner is that they never received the notice issued on 16th June, 2008 and were not aware of the hearing fixed on 24th June, 2008.
The Petitioner had filed an application u/s 154 of the Act claiming that they were not served with the notice for hearing and that the ex-parte order should be recalled. The said application has been dismissed recording that the notice dated 16th June, 2008 was sent by speed post but there was no appearance on behalf of the Petitioner.
The Petitioner trust was granted approval u/s 12A of the Act, in 1973. They were also granted approval u/s 80G of the Act. There is also no dispute that vide notification No. 60/2003, Director General, Income Tax (Exemption), Kolkata had notified the Petitioner u/s 10(23C)(vi a) of the Act. Similarly, it is undisputed that application in Form 56D was filed for grant/ continuation of exemption u/s 10(23C) (vi) and (vi a) of the Act for the assessment year 2008-09 onwards on 5th June, 2007. Unfortunately, the proceedings were not taken up right till the fag end of the limitation period which was to expire i.e. on 30th June, 2008. Notice may have been issued on 16th June, 2008 for hearing fixed on 24th June, 2008, but there is no proof of service or delivery. The Petitioner has disputed and denied that the said notice was served on them and had filed an affidavit of Dr. Bharat Singh, Medical Superintendent of the College that they had not received the notice. The affidavit had been disbelieved and not relied upon in the order dated 19th August, 2008 dismissing the application u/s 154 of the Act. However, the Director General of Income Tax (Exemption) did not take steps to verify from the postal authorities whether or not the notice sent by speed post was delivered. The stand of the Petitioner is that there was no cause or reason why they should not appear. The consequence of rejection of the application for grant and continuation of registration u/s 10(23C) (vi) & (vi a) are harsh and adverse. It is difficult to accept that the Petitioner was avoiding or deliberately avoided appearance. The impugned ex-parte order was passed in haste and hurry and without giving full and fair opportunity to the Petitioner.
Accordingly, we feel that the impugned order dated 27th June, 2008 should be set aside and the matter remanded for fresh decision of the Director General of Income Tax (Exemption), Delhi.
To avoid any further delay, the Petitioner is directed to appear before the Director General of Income Tax (Exemption) on 17th March, 2011 at 2.30 PM when a further date of hearing will be fixed. As a considerable time has elapsed, the Director General of Income Tax (Exemption) will try and dispose of the application for exemption in Form 56D filed on 5th June, 2007 expeditiously and preferably within a period of four months from 17th March, 2011. The matter will be decided on merits without being influenced by the earlier orders.
The writ petition is accordingly partially allowed to the above extent and the impugned orders dated 27th June, 2008 and 19th August, 2008 are hereby set aside.